Archive for the ‘Tax avoidance/evasion’ Category

Donald Trump’s candidacy is based to a great extent on the notion that a successful businessman would make an effective President. Democrats have shot holes in Trump’s claims of success, but they have not done enough to attack the underlying claim that private sector talents are applicable to the public realm.

The conflation of business and government acumen is all the more dangerous at a time when the norm in the corporate world is increasingly corrupt. The observation by Bernie Sanders during the primaries that “the business model of Wall Street is fraud” applies well beyond the realm of investment banking. Have those calling for government to operate more like business been paying attention to Wells Fargo, Volkswagen and EpiPen-producer Mylan?

It used to be that the main threat was that unscrupulous corporations would use investments in the political and legislative process to bend policymaking to favor their interests. Trump has shown that a corporate miscreant can use a pseudo-populist platform to try to take office directly.

Trump is not unique in this regard. Take the case of West Virginia, where a controversial billionaire coal operator is leading the polls in the state’s gubernatorial race. Jim Justice brags that he is a “career businessman” not a career politician, yet that career includes racking up some $5 million in fines imposed by the Mine Safety and Health Administration, according to Violation Tracker. To make matters worse, NPR and Mine Safety News reported in 2014 that Justice resisted paying these fines. An NPR update says that $2.6 million in MSHA fines and delinquency penalties remain unpaid even as the Justice mining operations continue to get hit with more safety violations.

On top of this, NPR estimates that the Justice companies face more than $10 million in federal, state and county liens for unpaid corporate income, property and minerals taxes. About one-third of the total is owed to poor West Virginia counties. Like Donald Trump, Justice has failed to follow through on charitable commitments yet has managed to pump several million dollars into his campaign.

Did I mention that Justice is the Democratic candidate? He is not, however, supporting Hillary Clinton though he is tight with conservative Democrat Sen. Joe Manchin. Justice’s Republican opponent is state senate president Bill Cole, whose super PAC received a $100,000 contribution from a super PAC funded by the Koch brothers. This was after Cole spoke at the Koch’s private conservative donors conference in Palm Springs last February, reportedly using his remarks to emphasize his commitment to getting a “right to work” law passed in West Virginia. While in the legislature Cole has also been cozy with the American Legislative Exchange Council and has pushed the crackpot supply-side economic prescriptions of Arthur Laffer. Cole is also an enthusiastic supporter of Trump.

It is difficult to know which is worse: a candidate in the pocket of unscrupulous corporate special interests or one who is himself one of those corporate miscreants. It is troubling to think that our elections increasingly come down to such an untenable choice.

Jack Mitnick may end up denying the presidency to Donald Trump. He also helped deprive me of my inheritance.

As the world now knows, the accountant confirmed to the New York Times the authenticity of leaked Trump tax return documents prepared by him that reported an annual loss of some $916 million in 1995 that may have allowed the mogul to avoid federal taxes for nearly two decades.

Trump was not Mitnick’s only client in the 1990s. He and his firm Spahr Lacher & Sperber also did work for my maternal grandfather Julius Nasso, who owned a concrete construction company in New York City. That firm did quite well for its work on projects such as Madison Square Garden and the Javits Convention Center.

My grandfather, who died in 1999, prospered from the business, but his wealth, I regret to say, was also enhanced through the use of dubious tax shelters involving coal leases. That’s where Mitnick comes in. From what I know, Mitnick’s firm either set up my grandfather in the shelters or at least prepared tax returns in which they were used to greatly reduce his tax liabilities.

The Internal Revenue Service eventually challenged the shelters, but my grandfather, apparently with Mitnick’s help, refused to settle. It was only after his death that the dispute was resolved by my family with a substantial payment to the IRS. One consequence of this was that the bequests in his will to me and the other grandchildren could not be fulfilled.

I long treated this as a private family matter, but after Mitnick’s name appeared in the Times story I did some research on him. I found that in 1981 Mitnick and other parties were sued by William Freschi Jr. in his role as trustee of the estate of his father, who like my grandfather had invested in coal lease tax shelters. The suit accused Mitnick, who was described as the administrator of Grand Coal Venture, and others of defrauding his father.

The case had a long and complicated legal history, including a racketeering charge and an action by the U.S. Supreme Court. In 1985 Mitnick and the other defendants were found guilty of securities fraud and ordered to pay Freschi $266,500 in damages, plus $126,681.75 in pre-judgment interest. The Court of Appeals, however, later overturned the award against Mitnick but did not completely exonerate him.

Given Mitnick’s close working relationship with Trump — the accountant is mentioned in The Art of the Deal — one cannot help wonder whether he also arranged for Trump to participate in the phony coal tax shelters. Given the other tax dodging tricks available in connection with his real estate holdings, Trump may not have needed them, but this is another question that will be answered only when Trump releases his full tax returns.

In the interest of full disclosure, I should mention that my grandfather’s company operated at times in a joint venture with S&A Concrete, a firm with alleged mob connections that separately did substantial business on Trump projects.

Apple’s indignant response to the European Commission tax ruling has nothing to do with an inability to pay. The company’s cash pile of more than $200 billion could cover the assessment several times over. Instead, it’s something more akin to the attitude attributed to the late New York hotelier Leona Helmsley: only the little people pay taxes.

Large corporations like Apple think that what they do is so important that they should be able to skirt their fair share of taxes. Some of their dodging is covert and some is done brazenly out in the open; some is done against the wishes of tax collectors and some is done with their full cooperation.

The covert portion of Apple’s tax avoidance started to come to light in 2012, when the New York Timespublished an investigation of the company’s use of esoteric accounting devices such as the “Double Irish With a Dutch Sandwich” to route profits in ways that minimized tax liabilities or eliminated them entirely. A year later, the Senate’s Permanent Subcommittee on Investigations issued a report providing additional details on Apple’s tax tricks. It also held hearings in which Apple CEO Tim Cook insisted what the company was doing was simply “prudent” management while Kentucky Sen. Rand Paul brought shame on himself by declaring that Apple was owed an apology.

While Congress has done little to thwart corporate tax dodging, the EC used the Senate report to launch an investigation of Apple that resulted in the recent ruling. Now some members of Congress are making fools of themselves by protesting that ruling.

As Apple’s global tax dodging has gotten the most attention, the company has been able to avoid some domestic taxes with much less bother. That because states and localities routinely offer the kind of special tax deals to individual companies that are banned in Europe, more so now that Ireland’s attempted end-run was rejected.

This is seen most clearly in the subsidy packages that Apple and other tech giants such as Facebook and Google receive when they build new data centers necessary to handle the ever-increasing volume of human activity taking place in “the cloud.” Although the decision as to where to locate the facilities is based primarily on considerations such as the availability of low-cost energy (data centers are power hogs), these companies want to receive large amounts of taxpayer assistance.

As my colleague Kasia Tarczynska points out in a forthcoming report on the subject, companies such as Apple regularly negotiate subsidy packages and special tax breaks worth hundreds of millions of dollars for data centers that typically create only a few dozen jobs.

In North Carolina, Apple successfully pressured the state to allow it to calculate its income taxes through a special formula that will save the company an estimated $300 million over the 30-year life of the agreement. Local officials provided property tax abatements worth about $20 million more. All this for a project that was to create only about 50 permanent jobs. Despite its $1 billion cost, the facility did little to boost the local economy. “Apple really doesn’t mean a thing to this town,” a resident told a reporter in 2011. Apple went on to receive generous subsidy packages for additional data centers in Oregon and Nevada.

Apple’s various forms of tax avoidance are reminders that large corporations, even those that profess to have enlightened social views, don’t have respect for government and resent having to follow its rules. Rather than pay taxes and follow regulations, they prefer to make charitable contributions and undertake corporate social responsibility initiatives. In other words, they want to do things on their own terms and not comply with the same obligations as everyone else. Kudos to Europe for beginning to put Apple in its place.

The publication of the Panama Papers is a bombshell, though the fallout is being felt much more in countries such as Iceland than in the United States. It’s true that the revelations about offshore tax havens have mentioned domestic counterparts such as Delaware, Nevada and Wyoming, but officials in those states don’t seem to think that any action needs to be taken. As the headline of an article in the BNA Daily Tax Report put it: STATES GIVE GROUP SHRUG TO PANAMA PAPERS.

One reason for the tepid reaction is that the criticisms have been heard before. As BNA points out, a 2006 report from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) listed the three states as being especially appealing to those seeking to create shell companies.

Another basis for complacency by the states is that their practices are part of a long and unfortunate tradition in the United States politely called federalism, but which is really a race to the bottom when it comes to oversight of corporations and the wealthy.

This trend dates back to the 19th Century, when the efforts of tycoons such as John D. Rockefeller to create vast industrial empires came up against the fact that state laws governing corporate charters put restrictions on the size and scope of a corporation’s activities, including the ownership of out-of-state companies. Rockefeller’s flagship firm Standard Oil of Ohio tried to get around this by creating the Standard Oil trust, in which affiliates were nominally independent but were actually controlled by a centralized board chosen by Rockefeller. Similar trusts were created in a variety of other industries.

Standard Oil’s transparent effort to circumvent state law was eventually struck down by the Ohio Supreme Court, but by that time Rockefeller and other robber barons had a new tool at their disposal: the willingness of some states to water down their chartering regulations to make them more attractive to big business.

The pioneer of this practice was New Jersey, which adopted a series of legislative measures from the 1870s through the 1890s to make its regulations more business-friendly. During this period, New Jersey became the destination of choice for trusts looking to legitimize themselves by reincorporating in a state that had no problem with bigness. That position was reinforced after Standard Oil made the Garden State its new base of operations. Muckraker Lincoln Steffens took to calling New Jersey the “traitor state.”

Other states sought to get in on this action. In 1899 Delaware adopted a corporation law that was even looser than New Jersey’s and had lower incorporation fees and franchise taxes. After New Jersey later changed course and went back to stricter corporation laws, it was Delaware that became the new mecca of corporations and has remained so to the present day.

Looser chartering procedures not only helped large corporations get larger but also made it easier for both businesses and wealthy individuals to set up the kind of shell companies highlighted in the Panama Papers. The ability and willingness of states to compete with one another to offer the most corporate-friendly practices goes well beyond company formation and governance.

Two areas in which the effects have been most pernicious are economic development and labor relations. Starting in the 1930s but especially during the past few decades, states have been willing to hand over larger and larger “incentive” packages to corporations to lure investments. For example, in 2014, following a multi-state competition, tax haven Nevada gave away nearly $1.3 billion in taxpayer revenue to get Tesla Motors to locate an electric-car battery plant in the state.

Some states also lure companies with the promise of weak or non-existent labor unions. Ever since the Tart-Hartley Act of 1947, states have had the right to enact laws outlawing union security provisions in collective bargaining agreements. These so-called right-to-work laws tend to weaken the ability of unions to organize while saddling existing unions with lots of free riders who don’t contribute to the cost of running the organization.

It’s widely understood that the notion of states’ rights is often a smokescreen for racial discrimination, but it’s also part of what enables other retrograde practices such as union-busting, corporate welfare and tax dodging.

Donald Trump is famous for making high-profile deals using other people’s money. Sometimes those other people are not his business partners or lenders but rather the taxpayers. For a figure who is seen to epitomize unfettered entrepreneurship, he has been relentless in his pursuit of government financial assistance.

Trump’s first major project, the transformation of the old Commodore Hotel next to New York’s Grand Central Station into a new 1,400-room Grand Hyatt, established the pattern. Trump arranged to purchase the property from the bankrupt Penn Central railroad and sell it for $1 to the New York State Urban Development Corporation, which agreed to award Trump a 99-year lease under which he would make gradually escalating payments in lieu of property taxes. The resulting $4 million per year tax abatement was criticized as excessive but was approved by the Board of Estimate in 1976. The deal also provided for profit sharing with the city. The total value of the abatement has been estimated from $45 million (Wall Street Journal, January 14, 1982) to $56 million.

In 1981 the New York Department of Housing Preservation and Development denied Trump’s request for a ten-year property tax abatement worth up $20 million on his project that replaced the old Bonwit Teller department store building with the glitzy Trump Tower. The decision came amid an effort by the city to rein in its abatement program, especially with regard to luxury projects. Trump, who in order to qualify had to argue that the property was underutilized as of 1971, filed suit and got a state judge to overrule the city and allow the abatement.

A state appeals court reversed that decision, pointing out that in 1971 the Bonwit Teller store on the site had gross sales exceeding $30 million and thus was not underutilized. Trump did not give up. He appealed to the state’s highest court, which in 1982 ordered the city to reconsider the application. When the city turned him down again, Trump went back to court and got a judge to order the city to grant the abatement.

Trump sought extensive tax breaks for his planned Television City mega-development on the Upper West Side of Manhattan that was designed to provide a new home for the NBC network, but in 1987 the city rejected the request. Mayor Ed Koch said: “Common sense does not allow me to give away the city’s Treasury to Donald Trump.” NBC decided to remain in Rockefeller Center.

Trump kept pushing for subsidies, and in 1993 he began withholding his tax payments to pressure officials to comply with his demands for tax breaks and state-backed financing. “I’ve always informed everyone that until such time that we get zoning and the economic development package together, to pay real-estate taxes would be foolish,” Trump told a New York Times reporter. A day later he said he had changed his mind and would pay the $4.4 million in back taxes he owed.

Trump later sought assistance for the project, renamed Riverside South, from the U.S. Department of Housing and Urban Development in the form of federal mortgage insurance, but he was rebuffed.

After Trump took over Washington’s Old Post Office Pavilion in 2012 to turn it into a luxury hotel, his company asked the DC government to forgo property taxes but it refused.

When Trump does not receive tax breaks he sometimes creates do-it-yourself subsidies by challenging the assessed value of his real estate holdings in order to lower his property tax bill. He has used this practice, which is employed by many other large corporations and property owners, in places such as Palm Beach. Trumped bragged that he got a great deal when he bought the 118-room Mar-a-Lago mansion in 1986 for $10 million (but only $2,812 of his own money, according to a June 22, 1989 article in the Miami Herald), implying it was worth much more. But when Palm Beach County assessed the property at $11.5 million, Trump appealed, seeking an $81,000 reduction in his taxes. A judge ruled against him (UPI, September 28, 1989). Trump later challenged an increased assessment and got a $118,000 reduction for one year but not for the next (Palm Beach Post, December 9, 1992).

In 1990 Trump won an assessment fight with New York City concerning his then-undeveloped waterfront property on the Upper West Side. He gained a $1.2 million savings in his 1989 taxes (Newsday, July 6, 1990).

More recently, Trump has been seeking a 90 percent reduction in property taxes on his Trump National Golf Club in Westchester County, New York. Trump listed the club as having a value of more than $50 million in the financial disclosure document he released as part of his presidential bid, yet his assessment appeal claims it is worth only $1.4 million.

It’s not hard to guess which figure is used when Trump wants to justify his claim of being worth $10 billion.

It’s said that the partisan divide is wider than ever, but there is one subject that unites the Left and the Right: opposition to the federal business giveaway programs popularly known as corporate welfare.

These programs include cash grants that underwrite corporate R&D, special tax credits allocated to specific firms, loan guarantees that help companies such as Boeing sell their big-ticket items to foreign customers, and of course the huge amounts of bailout assistance provided by the Treasury Department and the Federal Reserve to major banks during the financial meltdown. The costs to taxpayers is tens of billions of dollars a year.

Back in 1994 then-Labor Secretary Robert Reich gave a speech arguing that it was unfair to cut financial assistance to the poor while ignoring special tax breaks and other benefits enjoyed by business. Reich inspired a strange bedfellows coalition led by public interest advocate Ralph Nader and then-House Budget chair John Kasich (now governor of Ohio). Ultimately, the effort was stymied, as every business subsidy’s entrenched interests lobbied back. The subsidy-industrial complex emerged largely unscathed.

Nonetheless, the anti-corporate welfare movement has continued up to the present, with the latest battled being waged mainly by some Tea Party types against the Export-Import Bank.

Throughout these two decades of subsidy analysis and debate, the focus has been on aggregate costs, either by program, by industry or by type of company. Except for bailouts, very little analysis has been done of which specific corporations benefit the most from federal largesse.

My colleagues and I at Good Jobs First have just completed a project which will allow those on all sides of the debate to identify the companies enjoying corporate welfare. Today we are releasing Subsidy Tracker 3.0, a expansion to the federal level of our database which since 2010 has provided information on the recipients of state and local economic development subsidy awards.

We have collected data on 164,000 awards from 137 federal programs run by 11 cabinet departments and six independent agencies. Much of the data, covering the period from FY 2000 to the present, is extracted from the wider range of content on USA Spending, which also covers non-corporate-welfare money flows such as federal grants to state and local governments and federal contracts. We also tracked down about 40 other sources from a variety of lesser known reports and webpages. Farm subsidies are excluded as they are already ably covered by the Environmental Working Group’s agriculture database.

Our data does not cover the full range of federal business assistance, given that most tax breaks are offered as provisions of the Internal Revenue Code that any qualifying firm can claim. We include only the small number of tax credits (mostly in the energy areas) that are allocated to specific firms. But we’ve got plenty of company-specific grants, loans, loan guarantees and bailouts.

Today we are also releasing a report, Uncle Sam’s Favorite Corporations, that analyzes the federal data. While we don’t endorse or critique any of the wide-ranging programs themselves, we do find some remarkable patterns among the recipients.

The degree of big business dominance of grants and allocated tax credits is comparable to what we previously found for state and local subsidies. A group of 582 large companies account for 67 percent of the $68 billion total, with six companies receiving $1 billion or more.

At the top of the list with $2.2 billion in grants and allocated tax credits is the Spanish energy company Iberdrola, whose U.S. wind farms have made extensive use of a Recovery Act program designed to subsidize renewable energy.

Mainly as a result of the massive rescue programs launched by the Federal Reserve in 2008 to buy up toxic securities and provide liquidity in the wake of the financial meltdown, the totals for loans, loan guarantees and bailout assistance run into the trillions of dollars. These include numerous short-term rollover loans, so the actual amounts outstanding at any given time, which are not readily available, were substantially lower but likely amounted to hundreds of billions of dollars. Since most of these loans were repaid, and in some cases the government made a profit on the lending, we tally the loan and bailout amounts separately from grants and allocated tax credits.

The biggest aggregate bailout recipient is Bank of America, whose gross borrowing (excluding repayments) is just under $3.5 trillion (including the amounts for its Merrill Lynch and Countrywide Financial acquisitions). Three other banks are in the trillion-dollar club: Citigroup ($2.6 trillion), Morgan Stanley ($2.1 trillion) and JPMorgan Chase ($1.3 trillion, including Bear Stearns and Washington Mutual). A dozen U.S. and foreign banks account for 78 percent of total face value of loans, loan guarantees and bailout assistance.

Other key findings:

Foreign direct investment accounts for a substantial portion of subsidies. Ten of the 50 parent companies receiving the most in federal grants and allocated tax credits are foreign-based; most of their subsidies were linked to their energy facilities in the United States. Twenty-seven of the 50 biggest recipients of federal loans, loan guarantees and bailout assistance were foreign banks and other financial companies, including Barclays with $943 billion, Royal Bank of Scotland with $652 billion and Credit Suisse with $532 billion. In all cases these amounts involve rollover loans and exclude repayments.

A significant share of companies that sell goods and services to the U.S. government also get subsidized by it. Of the 100 largest for-profit federal contractors in FY2014 (excluding joint ventures), 49 have received federal grants or allocated tax credits and 30 have received loans, loan guarantees or bailout assistance. Two dozen have received both forms of assistance. The federal contractor with the most grants and allocated tax credits is General Electric, with $836 million, mostly from the Energy and Defense Departments; the one with the most loans and loan guarantees is Boeing, with $64 billion in assistance from the Export-Import Bank.

Federal subsidies have gone to several companies that have reincorporated abroad to avoid U.S. taxes. For example, power equipment producer Eaton (reincorporated in Ireland but actually based in Ohio) has received $32 million in grants and allocated tax credits as well as $7 million in loans and loan guarantees from the Export-Import Bank and other agencies. Oilfield services company Ensco (reincorporated in Britain but really based in Texas) has received $1 billion in support from the Export-Import Bank.

Finally, some highly subsidized banks have been involved in cases of misconduct. In the years since receiving their bailouts, several at the top of the recipient list for loans, loan guarantees and bailout assistance have paid hundreds of millions, or billions of dollars to U.S. and European regulators to settle allegations such as investor deception, interest rate manipulation, foreign exchange market manipulation, facilitation of tax evasion by clients, and sanctions violations.

Newly released transcripts of the 2009 meetings of the Federal Reserve’s open market committee show that monetary policymakers were still agonizing over whether they were doing enough to stabilize the teetering global financial system.

These documents have a special interest for me because, as I discussed in last week’s Digest, my colleagues and I at Good Jobs First recently collected a great deal of data about the Fed’s special bailout programs in 2008 and 2009 as part of the extension of our Subsidy Tracker database into the federal realm. The Fed’s info is part of the more than 160,000 entries we have amassed from 137 federal programs of various kinds. Subsidy Tracker 3.0 will go public on March 17.

In last week’s post I mentioned that the Fed programs involved the outlay of some $29 trillion (yes, trillion) and that the totals for several large banks (Bank of America, Citigroup, Morgan Stanley and JPMorgan Chase ) each exceeded $1 trillion. I pointed out that these totals referred to loan principal and did not reflect repayments (information on which is not readily available).

What I also should have pointed out is that some of the Fed lending consisted of relatively short-term loans that were often rolled over. In other words, the actual amount outstanding at any given time was considerably lower than the eye-popping trillion dollar figures. That’s not to say that the amounts were chicken feed. It’s safe to say that the loan totals were in the hundreds of billions of dollars, and here again company-specific amounts are not available.

This is still high enough to justify the point I was making about the bailout amounts far outstripping the sums these banks have been paying out in settlements with the Justice Department to resolve allegations about investor deception in the sale of what turned out to be toxic securities in the run-up to the financial meltdown. And the amounts still justify anger at the current crusade by the big banks to weaken the Dodd-Frank regulatory safeguards adopted by the same government that bailed them out.

What is also worth pointing out is that the bad actor-bailout recipients are not limited to the big U.S. banks. Large totals also turn up for major European banks that have been involved in their own legal scandals in recent years. The biggest foreign recipient of Fed support turns out to be Barclays, which has an aggregate loan amount (including rollover loans and excluding repayments) of more than $900 billion. Next is Royal Bank of Scotland with more than $600 billion and Credit Suisse with more than $500 billion.

In 2012 Barclays had to pay $450 million to U.S. and European regulators to settle allegations that it manipulated the LIBOR interest rate index. The following year Royal Bank of Scotland had to pay $612 million to settle similar allegations. In 2014 Credit Suisse had to pay $2.6 billion in penalties to settle Justice Department charges that it conspired to help U.S. taxpayers dodge federal taxes. This was a rare instance in which a large company actually had to plead guilty to a criminal charge.

The frustrating truth is that the global financial system is dominated by big banks that seem to have little respect for the law and for financial regulation, but they do not hesitate to turn to government when they need to be rescued from their own excesses.

It’s reassuring that the Justice Department is reportedly pushing a group of big banks, including Citigroup and JPMorgan Chase, to plead guilty to felony counts in connection with their brazen manipulation of the foreign currency market.

Yet Justice also needs to undo the damage done by its ill-advised 2012 decision to enter into a deferred prosecution agreement with HSBC, which was allowed to pay $1.9 billion in settlements rather than having to plead guilty to charges that it helped drug traffickers and terrorist groups evade money-laundering restrictions. Those practices had been detailed in a 300-page report by the U.S. Senate’s Permanent Subcommittee on Investigations, whose chair at the time, Sen. Carl Levin, called HSBC’s compliance culture “pervasively polluted for a long time.” A subsequent Matt Tiabbi Rolling Stonearticle about HSBC’s misdeeds quoted former Senate investigator Jack Blum as saying: “They violated every goddamn law in the book.”

The key prosecutor in the 2012 case was Loretta Lynch, the U.S. Attorney for the Eastern District of New York and now President Obama’s choice to succeed Eric Holder as Attorney General. The deal is back in the news in connection with extraordinary revelations about the role of HSBC’s Swiss private banking unit in abetting widespread tax evasion by thousands of wealthy individuals from around the world.

The International Consortium of Investigative Journalists (ICIJ), working in concert with news organizations around the world, adds another major dimension to the misconduct at HSBC. What ICIJ calls its Swiss Leaks project is based on a vast amount of internal bank data that former HSBC technology employee Hervé Falciani provided to tax authorities in various countries in 2010. A French official later re-leaked the data to Le Monde, whose staffers realized they had more information that they could possibility research on their own and so enlisted ICIJ and others, including 60 Minutes in the U.S., to join in the fun.

All this amounts to one of the most remarkable examples ever of collaborative investigative journalism on a global scale. The ICIJ site has links to investigations published not only in Western Europe but also in countries ranging from Ecuador and Argentina to Egypt and India. The geographic diversity stems from the fact that the leaked data relates to more than 100,000 HSBC clients in some 200 countries.

ICIJ takes pains to point out that there may be legitimate reasons for these people to have accounts in Switzerland, but it is clear that a substantial number of the clients were using them to conceal income from tax collectors. They also included individuals involved in unsavory pursuits such as arms trafficking, blood diamonds and bribery.

Some of the governments that received the data from Falciani have already begun bringing cases against individuals, but the revelations are also causing crises for some governments themselves. This is especially so in Britain, where Prime Minister David Cameron is under fire for having chosen a former HSBC executive to serve as a minister.

Even more precarious is the position of HSBC itself, which stands accused of not just allowing rich people to open the secret accounts but also of actively assisting their tax dodging. The Guardian, for instance, is reporting that HSBC contacted clients to market techniques that would allow them to evade a system under which the bank was supposed to collect a sort of withholding tax on the secret accounts on behalf of European Union revenue authorities.

This brings things back to Loretta Lynch, who is not yet confirmed by the Senate but who is already facing pressure from the likes of Elizabeth Warren to come down harder on HSBC this time around. She should give in to those pressures.

Holder’s departure from the Justice Department creates an opportunity to end the shameful practice of letting unscrupulous large companies buy their way out of serious legal jeopardy with payments, which despite growing in size still do little to deter ongoing corporate crime.

Google’s Project Zero works on computer security, but that name could more be more accurately applied to the efforts of high-tech giants and other large U.S. corporations when it comes to federal tax policy: they want to pay less and less, and ultimately nothing at all. President Obama’s new tax reform proposal could end up assisting the business campaign.

Obama is endorsing the long-standing business proposal for a reduction in the statutory rate (from 35 to 28 percent) while at the same time offering an even lower rate (14 percent) on repatriated foreign profits being held abroad and a 19 percent rate on future overseas business income (minus foreign taxes paid). The revenue from the tax on accumulated offshore earnings would be earmarked for infrastructure projects.

Much of the reaction to the plan has framed the offshore provisions as a big tax hit on companies such as Apple, Microsoft and Citigroup. The Business Roundtable accused Obama of seeking “steep tax increases on businesses that will negatively impact their competitiveness.”

This view make sense only if you take as the norm the current effective tax rate imposed on these cash hoards, which is zero. In reality, that cash — which in the case of Apple alone exceeds $130 billion — should be seen as the ill-gotten gains of systematic international tax dodging and thus hardly worthy of preferential tax treatment.

This was made clear with respect to Apple in a 2013 report by the Senate investigations subcommittee that described a wide array of loopholes and tricks used by the iPhone producer. Nonetheless, CEO Tim Cook came to Capitol Hill and testified that Apple was not using gimmicks but simply managing its foreign cash holdings prudently. Sen. Rand Paul was taken in by this deceit and declared that Apple was owed an apology.

Too many members of Congress are willing not only to accept the legitimacy of offshore cash hoards but also to go along with misguided schemes to “incentivize” companies to bring some of that money back home. Last month, Sen. Paul and his Democratic colleague Barbara Boxer called for a “tax holiday” that would allow the repatriation of foreign profits with a tax rate of only 6.5 percent. This would be a replay of 2005 holiday that brought some $300 billion back to the United States, but it turned out that very little of the money was used to stimulate investment and job creation, as proponents had promised. Instead, much of it was spent on corporate stock buybacks.

Although he is not using the term, Obama’s 14 percent proposal amounts to the same kind of dubious tax holiday scheme. His higher rate is being regarded in business circles as simply an opening offer that corporate lobbyists will bring down to “reasonable” levels.

The corporate position on repatriated profits looks all the more unreasonable in light of the recent financial performance of leading offshore cash hoarder Apple. The company has more money than it knows what to do with. In January it reportedquarterly profits of $18 billion, thanks to the sale of a ridiculous number of iPhones. This was a record not only for Apple but was the biggest quarterly net in corporate history.

Apple may not be sure how to use that windfall, but like many other large companies it is certain what it does not want to do: pay its fair share of taxes.

The bull market in corporate crime surged in 2014 as large corporations continued to pay hefty fines and settlements that seem to do little to deter misbehavior in the suites. Payouts in excess of $1 billion have become commonplace and some even reach into eleven figures, as seen in the $16.65 billion settlement Bank of America reached with the Justice Department to resolve federal and state claims relating to the practices of its Merrill Lynch and Countrywide units in the run-up to the financial meltdown.

This came in the same year in which BofA reached a $9.3 billion settlement with the Federal Housing Finance Agency concerning the sale of deficient mortgage-backed securities to Fannie Mae and Freddie Mac and in which the Consumer Financial Protection Bureau ordered the bank to pay $727 million to compensate consumers harmed by deceptive marketing of credit card add-on products.

The BofA cases helped boost the total penalties paid by U.S. and European banks during the year to nearly $65 billion, a 40 percent increase over the previous year, according to a tally by the Boston Consulting Group reported by the Wall Street Journal.

Among the other big banking cases were the following:

France’s BNP Paribas pleaded guilty to criminal charges and paid an $8.9 billion penalty to U.S. authorities in connection with charges that it violated financial sanctions against countries such as Sudan and Iran.

U.S. and European regulators fined five banks — JP Morgan Chase, Citigroup, HSBC, Royal Bank of Scotland and UBS — a total of more than $4 billion after accusing them of conspiring to manipulate the foreign currency market.

Credit Suisse pleaded guilty to one criminal count of conspiring to aid tax evasion by U.S. customers and paid a penalty of $2.6 billion.

JPMorgan Chase paid $1.7 billion to victims of the Ponzi scheme perpetuated by Bernard Madoff to settle civil and criminal charges that it failed to alert authorities about large numbers of suspicious transactions made by Madoff while it was his banker.

Banks were not the only large corporations that found themselves in legal trouble during the year. The auto industry faced a never-ending storm of controversy over its safety practices. Toyota was hit with a $1.2 billion criminal penalty by U.S. authorities for concealing defects from customers and regulators. The National Highway Traffic Safety Administration fined General Motors $35 million (the maximum allowable) for failing to promptly report an ignition switch defect that has been linked to numerous deaths. Hyundai and its subsidiary Kia paid $300 million to settle allegations that they misstated the greenhouse gas emissions of their vehicles.

Toxic dumping. Anadarko Petroleum paid $5.1 billion to resolve federal charges that had been brought in connection with the clean-up of thousands of toxic waste sites around the country resulting from decades of questionable practices by Kerr-McGee, now a subsidiary of Anadarko.

Pipeline safety. The California Public Utilities Commission proposed that $1.4 billion in penalties and fined be imposed on Pacific Gas & Electric in connection with allegations that the company violated federal and state pipeline safety rules before a 2010 natural gas explosion that killed eight people.

Contractor fraud. Supreme Group BV had to pay $288 million in criminal fines and a $146 million civil settlement in connection with allegations that it grossly overcharged the federal government while supplying food and bottled water to U.S. personnel in Afghanistan.

Bribery. The French industrial group Alstom consented to pay $772 million to settle U.S. government charges that it bribed officials in Indonesia and other countries to win power contracts. Earlier in the year, Alcoa paid $384 million to resolve federal charges that it used a middleman to bribe members of Bahrain’s royal family and other officials to win lucrative contracts from the Bahraini government.

Price-fixing. Japan’s Bridgestone Corporation pleaded guilty to charges that it conspired to fix prices of anti-vibration rubber auto parts and had to pay a criminal fine of $425 million.

Defrauding consumers. AT&T Mobility had to pay $105 million to settle allegations by the Federal Trade Commission and the Federal Communications Commission that it unlawfully billed customers for services without their prior knowledge or consent.

The list goes on. Whether the economy is strong or weak, many corporative executives cannot resist the temptation to break the law in the pursuit of profit.